AIM-listed United Oil & Gas has announced the termination of the Asset Purchase Agreement ('APA') with Quattro Energy under which the parties had agreed to the conditional sale by United to Quattro of the UK Central North Sea Licence P2519 containing the Maria discovery in Block 15/18.
On 4 October 2023 United announced that the long stop date for the satisfaction of the APA conditions had been further extended to 27 October 2023. Whilst the regulatory consent for the transfer of the licence had been approved, Quattro had not satisfised the funding conditions under the APA by the extended long stop date and the parties have not agreed to a further extension.
Notwithstanding the prospectivity of this licence, against the backdrop of the current regulatory and fiscal challenges impacting the UK North Sea undermining investor confidence in the progression of potential developments in this sector, Quattro have been unable to raise the funds to complete the transaction.
Further, the current phase of the Licence expires on 30 November 2023 and a firm commitment to drill a well in the next phase of the licence is required to continue the Licence beyond this date. Whilst United recognise the potential prospectivity of a development on this Licence, having exhausted all other available avenues to progress this opportunity, United has made the decision not to apply to move into the next phase of the Licence. It is therefore expected that the Company's interest in this Licence will cease on the 30 November 2023. As at 30 June 2023, the Group carried an intangible balance of $1.0m representing the amount capitalised to that date on the Maria discovery.
Brian Larkin, Chief Executive Officer commented:
'Over recent years, we have successfully monetised our interests in licences in both the North Sea and in Italy, using the proceeds to fund our activities in Jamaica, the North Sea and also corporate G&A. We had identified our interest in the Maria licence as non-core to our future strategy and on that basis undertook a farmout process which resulted in the agreement to sell to Quattro on the terms announced in January this year. Since signing this agreement with Quattro, we have sought to support their efforts to raise the funds required to complete this transaction and had regular interaction with the Quattro team and their advisors as they progressed their funding process. It is therefore a disappointing outcome for both parties, that due to the challenging regulatory and fiscal backdrop in the North Sea, Quattro were unable to complete their funding process. Throughout the last 12 months, the company has incurred only licence costs in relation to the Maria licence, the cost of which is effectively covered by the $100k non-refundable deposit received in September."
'Our focus remains on progressing the farmout of Jamaica and the upcoming drilling activities in Egypt including the drilling of the ASD-S-1X exploration well later this year.'
Source: United Oil & Gas
